There are multiple reasons for why people decide to start up a business. The main ones are: growth, earnings, transference and inheritance (Hoang, 2014). Entrepreneurs can choose from different business structures sole proprietorship, partnerships, private limited company, public limited company, and franchise. However, according to the Small Business Administration, 50% of the businesses fail in their first year (Meszaros, 2016). This is due to the difficulties a business faces such as: lack of profitability, and cash flow problems (Hoang, 2014). There are ways to avoid or lower the start-up risks such as growing inorganically through dealings with outside businesses, it is a quicker way to grow, and businesses get to share costs and benefit
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It is very dependent on its franchisees since the franchising has led to its “years of profitability, growth and risk mitigation” (Nielson, 2013 pg.na). Today, McDonald’s has more than 35,000 franchised restaurants in more than 100 countries (Daszkowski, 2016). In order to franchise McDonalds, the franchisee must have a “minimum of $500,000 of non-borrowed personal resources” (Daszkowski, 2016). The franchisee has to pay an initial investment of $1,003,000 (Daszkowski, 2016). In return, the franchisor takes 4% of royal fees monthly and a percentage rent from the sales as McDonald 's acts as the landlord (Daszkowski, 2016). The franchisor offers support on site up to two years to the franchisee with ongoing newsletters, meetings, internet, security, field operations as well as marketing support (Entrepreneur, 2016). In regards to food safety and quality standards, McDonald 's strictly enforces its quality centers located around its franchisees to ensure that high standards are being met (Nielson, 2013). McDonald 's will continuously communicate to its franchisees new techniques, and improvement in management. Operations consultants will be visiting each franchisee and make sure that all new services, and facilities are being updated (DePilis, 2016). Until today, McDonald’s has been committed to franchising as an alternative growth strategy as it finds it being the easiest, quickest, most profitable, predominant way of doing business. Today, McDonald’s is globalized and known by everyone. It didn’t have to enter each market, study it, know its customer, market it and waste this research plan time to open up internationally. It had others do it as they already know their market and has studied
It is very dependent on its franchisees since the franchising has led to its “years of profitability, growth and risk mitigation” (Nielson, 2013 pg.na). Today, McDonald’s has more than 35,000 franchised restaurants in more than 100 countries (Daszkowski, 2016). In order to franchise McDonalds, the franchisee must have a “minimum of $500,000 of non-borrowed personal resources” (Daszkowski, 2016). The franchisee has to pay an initial investment of $1,003,000 (Daszkowski, 2016). In return, the franchisor takes 4% of royal fees monthly and a percentage rent from the sales as McDonald 's acts as the landlord (Daszkowski, 2016). The franchisor offers support on site up to two years to the franchisee with ongoing newsletters, meetings, internet, security, field operations as well as marketing support (Entrepreneur, 2016). In regards to food safety and quality standards, McDonald 's strictly enforces its quality centers located around its franchisees to ensure that high standards are being met (Nielson, 2013). McDonald 's will continuously communicate to its franchisees new techniques, and improvement in management. Operations consultants will be visiting each franchisee and make sure that all new services, and facilities are being updated (DePilis, 2016). Until today, McDonald’s has been committed to franchising as an alternative growth strategy as it finds it being the easiest, quickest, most profitable, predominant way of doing business. Today, McDonald’s is globalized and known by everyone. It didn’t have to enter each market, study it, know its customer, market it and waste this research plan time to open up internationally. It had others do it as they already know their market and has studied